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IoD calls for tax breaks to boost skills

16 May 2017

The next Government must dramatically boost the skills of workers with new tax breaks for training, the Institute of Directors urged today. With the Conservative Party beginning the week proposing to give employees more time off for training, the IoD, which represents 30,000 business leaders, called for extra regulation to be matched with the financial leeway to make it easier for both companies and individuals to invest in professional development.

The business group is calling for two new incentives for training. The first is for businesses, granting them an enhanced corporation tax deduction for staff training, and the second is a top up on the income tax personal allowance for individuals who want to increase their skills or re-train to change industries. The latter, the IoD argues, is particularly needed to help workers adapt to coming changes in the labour market due to automation and digital technologies.

In the fifth of a series of manifesto papers, setting out the economic challenges facing the next government, the IoD also called for politically independent school curricula, mandatory work-experience and access to a full-time careers coach for all pupils, and much better collaboration between companies and educational establishments.

The next government to avoid unnecessary distractions such as creating extra grammar schools and focus on more pressing concerns facing schools such as tackling the teacher shortage crisis, which threatens to have detrimental effect on the skills pipeline for employers.

The Apprenticeship Levy to be reformed to allow employers and the self-employed more flexibility. The one-size-fits-all model does not give employers or the self-employed the flexibility to provide and use the most appropriate forms of training.

Education curricula to be monitored and re-examined by an independent body, advising schools on subject choice to produce a workforce for relevant demands, free from political interference.

DWP, the Careers and Enterprise Company, Job Centre Plus and other relevant bodies to explain in their Annual Reports what they are doing to adapt their work to adult retraining as well as those in education. With industries changing so quickly, focussing only on those under 16, 18 or 21 will only solve half the problem.

Seamus Nevin, Head of Employment and Skills Policy at the Institute of Directors, said:

“We are living in a time of major change in the labour market. Leaving the EU, combined with the effect of automation, the gig economy and changing demographics, will mean that the nature of work changes for many people in the coming years. Some industries will inevitably decline while others are likely to grow and prosper. The skills demands of employers will consequently change. Indeed, there is a clear desire from a number of parities to reduce migration, and in order to avoid a detrimental effect on the economy, we must start to produce more home-grown talent with the right skills to meet the needs of businesses.

“As we find ourselves at a political crossroads, there is a real opportunity to make the right changes, not only to fix the current skills gaps, but also pre-emptively deal with future changes to the labour market. There are a number of challenges, however, so the next Government will have to use all of the tools at its disposal across the education, tax and regulatory systems.”